IMF Unlocks 1.8 Billion US Dollars for Egypt After Latest Programme Review

August 1, 2026
By Mintesinot Nigussie

The International Monetary Fund (IMF) has approved the release of about 1.8 billion US dollars in financing for Egypt after completing reviews of its economic reform programmes, bringing total disbursements under the two arrangements to about 7.3 billion US dollars. The IMF Executive Board completed the seventh review of Egypt’s 48-month Extended Arrangement under the Extended Fund Facility (EFF) and the second review under the Resilience and Sustainability Facility (RSF). The approval allows the country to immediately access 1.5 billion US dollars under the EFF and 272 million US dollars under the RSF.

The Fund said Egypt entered the latest period of regional instability with stronger economic buffers than during previous external shocks, supported by improved growth, declining inflation pressures and higher foreign exchange reserves. Economic growth accelerated during the fiscal year, with real gross domestic product expanding by 5 percent in the third quarter of FY2025/26, bringing growth during the first nine months of the fiscal year to 5.2 percent. The IMF expects full-year growth to reach about 4.6 percent, only marginally below its previous projection.

Inflation, however, remains elevated. Headline inflation rose to 15.2 percent in March 2026, driven mainly by currency depreciation and higher energy prices, before easing to 14.3 percent in June. Core inflation also stood at 14.3 percent in June, with underlying monthly price pressures remaining high, according to IMF estimates. The country’s external position has faced pressure from higher oil and gas prices, but record remittance inflows, strong tourism receipts and a gradual recovery in Suez Canal revenues have helped limit the impact. The current account deficit is estimated at 4.5 percent of GDP in FY2025/26.

Gross international reserves remained resilient, reaching 119 percent of the IMF’s Assessing Reserve Adequacy metric by the end of June, supported partly by renewed foreign currency inflows and central bank purchases. Fiscal performance also exceeded programme targets, with the primary balance and tax revenue targets surpassed by the end of March 2026. The IMF said gross financing needs declined by 5 percent of GDP during FY2025/26, while the tax-to-GDP ratio is projected to increase by 1.2 percentage points during the fiscal year. Despite progress on some reforms, the IMF said efforts to reduce the state’s role in the economy and accelerate private sector participation have moved more slowly than expected. The Fund highlighted the need to speed up implementation of the State Ownership Policy and the government’s divestment programme.

Egypt has recently completed the Gabal El Zeit transaction and sold stakes in selected listed companies, bringing total divestment proceeds to about 520 million US dollars, according to the IMF. Nigel Clarke, IMF Deputy Managing Director and Acting Chair, said Egypt’s policy response, including exchange rate flexibility, energy price adjustments and targeted support measures, helped contain the effects of regional shocks. "However, important vulnerabilities remain, reflecting elevated public debt, large gross financing needs, and a sizable state footprint," Clarke said. He called for continued fiscal discipline and faster structural reforms to strengthen economic resilience. The IMF said the outlook remains exposed to risks from renewed regional tensions, higher global inflation, tighter financial conditions and slower reform implementation. Growth is projected to moderate to 4.4 percent in FY2026/27, while inflation is expected to rise to 16.7 percent in the second half of 2026 due to higher energy prices, exchange rate pressures and base effects. The Fund also urged authorities to maintain exchange rate flexibility, continue building reserves, strengthen debt management and reduce reliance on short-term financing. It said accelerating divestment, improving competition, strengthening state-owned enterprise governance and expanding private sector participation would be critical to raising productivity and supporting longer-term growth.

Source: FSX Business News